A recent article in The NBR also raised concerns at the prospect of shoebox apartments (paywalled). Despite its intentions, the article actually made a convincing case for why Minimum apartment size rules aren’t needed. The article noted that banks generally don’t like small apartments and often won’t provide loans for apartments less than 50m 2 in size. If that’s the case then developers generally won’t want to build tiny apartments. Developers aren’t in the business of throwing away money and if prospective apartment buyers can’t get a loan for a tiny house then the developers won’t want to build something no one can buy.

3. The market has an incentive to provide larger apartments

People generally favour more space than less space if they can afford it. This provides an incentive for developers to build larger apartments. Indeed, the latest round of intensified construction going on in Auckland’s city fringe is producing much larger and higher quality apartments than the construction boom of the early 2000s. This shows there is demand for larger apartments and that the market has moved on from where it was 15 years ago.

4. Limited development opportunities incentivise the development of smaller apartments

Until recently, intensified residential development was largely prohibited in most areas outside of Auckland’s CBD. This made well located residential floor space scarce. This scarcity provided an incentive to build tiny apartments like those that proliferated in the early 2000s. If additional residential floor space can be constructed in more areas, the scarcity of floor space is reduced and there is potential to provide bigger apartments. Additionally the more development opportunities there are, the more developers will need to compete on things like size and quality to attract buyers.

5. Small apartments can be nice and some people want to live in them

Despite all of the above there are still some circumstances where a developer will want to provide a small apartment and there are some people who will want to live in them. With good design, small studio apartments can be nice and they can work for some. Young people with an active social life may only need a house for crashing and the occasional shower. Why should they be denied the option of paying less money for less space? And if a cramped apartment is the best someone can find within their budget and other constraints, how would they be better off if that apartment didn’t exist?

All excellent points.

Planning rules should be about controlling the external effects of development. It’s hard to see what external effects small apartments create and why they should be of concern to anyone other than those who choose to live in them. If hand-wringing about “shoeboxes” is really from a genuine concern for the welfare of those living in them, then the hand-wringers should be even more concerned about people living in cars (the ultimate shoebox dwelling) and uninsulated garages. A small apartment is a much better option than a car or homelessness for those without other options. And for those really concerned about others having better housing options, the best way to achieve that is to ease the arbitrary rules that create an overall shortage of housing and prevent more affordable housing from being built.

It’s sad to see the Auckland Council vote for minimum sizes, which may keep prices higher than they need to be. But to be fair overall most of their votes have been in favour of the independent panel’s reccomendations.

Rich Prick

Planning rules should be about controlling the external effects of development.

On a principled approach that is exactly right. The market and consumer choice will control internal effects. Otherwise why stop at floor area, why not set rules for wall colour, whiteware brand and flooring finishes? Afterall, history has shown us that design by politburo is an absolute success.

hemihua

You do need to regulate against them if you don’t want a ghetto in your neighbourhood. Smaller / cheaper low quality builds tend to be rentals rather than owner occupied and attract the lower end of the market.

Harriet

Surely Knott

Maybe Banks don’t lend on small apartments . But what about Housing NZ? Controversy as Glen Eden is about to receive 3 x 10 story high rises with 1 bedroom apartments aparently tipped to be all social housing. Maybe that’s how they are doing the 1 bedroom thing. Unhappy that 3 blocks of apartments not wiht a percentage of social housing but basically a small city of exclusively social housing in one suburb. Is this the new model?

Simon

hmmokrightitis

Bollocks to that hemihua. I own, as do a bunch of my friends and family, an apartment in Wellington. Bought it as an investment around 5 years ago. We keep it empty because we know in a couple of years we will most likely have children attending Vic who will want a decent place to live. In the interim we use it for weekends away and Ill use it when Im working down there, up to 3 nights a week.

Size has nothing to do with it (yes, right argument 🙂 ) build quality does. Like hell Im buying something thrown together, but Ill happily sacrifice size for quality of build and fit out.

MCos

According to the NZ Herald article referred to, around twenty years ago 12sqm appartments were being built in Auckland before the current 35sqm min regulation came into effect. That’s the size of a small bedroom – let alone a bathroom as well. Forget about a kitchen. Nevertheless they were in demand then and they’ll be in demand now.
I have lived in a couple of appartments in Bangkok around about 35sqm. One room plus a bathroom. A refrigerator in the main room. No cooking facilities & any dirty dishes washed in the bathroom. Most meals bought and eaten for a few dollars out in the nearby streets.
Auckland may have a housing problem, but I don’t think the answer is to adopt third world solutions.
I don’t care what F McRae says if tiny cheap shitty appartments are available people will buy them. If they didn’t have to have windows, people would buy them too.

People generally favour more space than less space if they can afford it. This provides an incentive for developers to build larger apartments. Indeed, the latest round of intensified construction going on in Auckland’s city fringe is producing much larger and higher quality apartments than the construction boom of the early 2000s. This shows there is demand for larger apartments and that the market has moved on from where it was 15 years ago.

The land costs in Auckland are now higher than Sydney, but our apartment sale prices are nowhere close to Sydney. This means that all Auckland apartment builds are confined to the tiny sliver of a market intersection that exists between high building costs and low sale values. Our market is therefore very slow and does not build many apartments, but also that almost none of them will be shoebox size.

It does not reflect a change in demand, it is simply due to the work and effort Len Brown and Penny Hulse have put into destroying the Auckland apartment market by pushing land costs through the roof.

mara

If I were a young person with limited means who wanted to live in Auckland city I would rather buy a “shoe-box” than pay rent to a landlord. There is surely some eventual capital gain in purchasing them, however meagre. That said, there is much talk now about the rush to build housing for the rapidly growing population here; I rather suspect that in a few years’ time the talk may be all about newly created slums and our lack of foresight in not anticipating the blight of bleak high-rise, poorly built accommodation and the attending social and planning problems of this rapid social crush .

WineOh

There’s plenty of sub-30sqm apartments in Paris, and not even elevators in many of the buildings to reach them.
Here’s 16sqm studio for 700 Euros per month: http://www.paris-housing.com/rent/studio/140709
That’s furnished, separate small kitchen, and fold out bed, but definitely liveable. 155 Euros per week.

cha

It’s sad to see the Auckland Council vote for minimum sizes, which may keep prices higher than they need to be.

Let’s go Japanese and see how it works out.
/

Here is a startling fact: in 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).

Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged.

1. You don’t have to live in one No one can force you to live in a shoebox. This isn’t North Korea. It’s not even Cuba.

I’m not so sure about this statement.

Economic incentives and opportunities aren’t under the complete control of purchasers. While I have no reason to believe there’s a danger that needs legislating against I don’t think people can blithely ignore the pressure others choices can push on them.

People searching for homes to rent in Auckland (or any other hot property market) don’t get to refuse the prices they must pay, they are forced by circumstance to pay or look down market for what they can afford and while no one may hold a gun to their head you can’t just say “No one can force you to live in an expensive rental” because maybe the only other option is a shoebox when space is at a premium.

waikatosinger

What the council mostly does it create rules, and what those rules do is mostly stop people from doing things. If you want more to happen with regard to housing then less rules is a lot better than more.

dog_eat_dog

Yea, so the experiment in the 2000s proved that the market will delivery overwhelmingly one type of low quality apartment. But we’re supposed to believe the already-broken market won’t just fart another 100,000 30 square metre apartments, which we supposedly need because the market has failed to delivery the number of houses we needed in the first place.

You can be damn sure the price of a first home won’t go down, you’ll just get a hell of a lot less (and a lot more ongoing fees like bodycorp) for your money.

jawnbc

PhilBest

Saying that “you don’t have to live in” something smaller than you would prefer, in a rigged market, is like saying the people in the lowest quintile starving to death in a corrupt country with an oligopoly running its food market, “don’t have to only buy half a slice of bread every 3 days”.

In a genuinely affordable, non-rigged market, the evidence that “you don’t have to live in” 30 square metre shoebox apartments, is that when a developer offers them, he can’t sell any:

As that article points out, who needs to live in such a small apartment when the median house available at 3 times median income, is a McMansion with 4 bedrooms, and 100 square metre apartments are sufficiently rock-bottom in price for anyone who really, really does not want “too much space”.

In a rigged market like UK cities, Vancouver, San Francisco and Auckland, the tighter you can cram people in, the bigger the gouge that is possible in site values. It is a lie that site values obligingly remain static or do not rise significantly, when allowed density is increased.

Tauhei Notts

My concern about the shoe size apartments is not their size; it is the extortionate charges made by the body corporates that administer them.
Their charges are those that make real estate agents and computer salesmen look honest.